Government Mulls Terms of Power Grid Lease

YEREVAN (RFE/RL)–The Armenian authorities have started working out the terms of national electricity distribution companies’ lease to a private operator after two unsuccessful attempts to privatize them.

The deputy head of the State Regulatory Commission on Energy–Nikolay Grigorian–told RFE/RL on Monday that the authorities hope to give management rights to the four power grids to a foreign company capable of eliminating the energy sector’s huge financial losses. He said the lease will smooth the way for their eventual sell-off.

"The networks’ authorized management would still be a step forward," he said. "We will privatize them sooner or later."

The government’s attempts to reform the energy sector suffered another setback on Friday when no foreign investor showed interest in the state-run power utilities put on an international tender. The first such bidding held in April also ended in failure. Energy Minister Karen Galustian said the cabinet will decide their fate in the course of this month.

But according to Grigorian–the decision to try to lease the utilities has already been taken. He said senior energy officials are already working on the conditions that will be attached to the next offer to foreign investors. He said the future operator will be required to ensure a full collection of electricity fees from all consumers.

Armenia generated $180 million worth of electricity last year. But only $120 million was collected by the utilities. The resulting huge loss is widely blamed on rampant corruption and inefficiency of their executives.

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